**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

 

**Washington, D.C. 20549**

 

**SCHEDULE 14A INFORMATION**

 

**Proxy Statement Pursuant to Section 14(a) of the**

** Securities Exchange Act of 1934**

 

 

Filed by the Registrant           [X]

 

Files by a Party other than the Registrant           [  ]

 

Check the appropriate box:

 

[  ]    Preliminary Proxy Statement

 

[  ]    Confidential, for Use of the Commission Only (aspermitted by Rule 14a-6(e)(2))

 

[X]    Definitive Proxy Statement

 

[  ]    Definitive Additional Materials

 

[  ]    Soliciting Material Pursuant toSection 240.14a-12

 

 

**PACIFIC STATE BANCORP**

_____________________________________________________________________________________________

(Name of Registrant as Specified In Its Charter)

_____________________________________________________________________________________________

(Name of Person(s) Filing Proxy Statement, if otherthan the Registrant

 

Payment of Filing Fee (Check the appropriate box):

 

[X]    No fee Required.

 

[  ]    Fee computed on thetable below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 
| 1)     |   | Title of each class of securities to which    transaction applies:                                                                                                                                         |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                       |
| 2)     |   | Aggregate number of securities to which    transaction applies:                                                                                                                                            |
|   |   |                                                                                                                                                                                                       |
| 3)     |   | Per unit price of other underlying value of    transaction computed pursuant to Exchange Act Rule 0-11 (set forth the    amount on which the filing fee is calculated and state how it was    determined): |
|   |   |                                                                                                                                                                                                       |
| 4)     |   | Proposed maximum aggregate value of    transaction:                                                                                                                                                        |
|   |   |                                                                                                                                                                                                       |
| 5)     |   | Total fee paid:                                                                                                                                                                                            |

 

[  ]    Fee paid previouslywith preliminary materials.

 

[  ]    Check box if any partof the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identifythe filing for which the offsetting fee was paid previously. Identify theprevious filing by registration statement number, or the Form or Schedule andthe date of its filing.

 
| 1)     |   | Amount Previously Paid:                       |
|--------|--------|-----------------------------------------------|
|   |   |                                          |
| 2)     |   | Form, Schedule or Registration Statement No.: |
|   |   |                                          |
| 3)     |   | Filing Party:                                 |
|   |   |                                          |
| 4)     |   | Date Filed:                                   |

 

----

 

 

 

**PACIFIC STATEBANCORP**

 

May 20, 2010

 

Dear Fellow Shareholder:

 

        The Board of Directors and I wouldlike to extend a cordial invitation for you to attend our Annual Meeting ofShareholders of Pacific State Bancorp ("Bancorp"). The Meeting willbe held June 10, 2010, at the main branch of Pacific State Bank, 1547 E. MarchLane, Stockton,California, at 4:30 p.m. for the followingpurposes.

 

        A Notice of Annual Meeting anda Proxy Statement are enclosed with this letter describing in detail thematters to be acted upon at the meeting. Your participation in Bancorp'sactivities is important, and we hope you will attend. 

 

        Whether ornot you plan to attend the meeting, please be sure to complete, sign, date andreturn the enclosed proxy card in the enclosed business reply envelope or votevia telephone or the Internet. Returning the enclosed proxy or voting bytelephone or the Internet will not prevent you from voting in person if youchoose to attend the Annual Meeting.

Voting yourproxy helps Bancorp to reach its quorum requirements for the Annual Meeting andavoids the added expense of postponing the meeting until a quorum can beorganized. 

 

 

Sincerely, 

 

 

 

Rick D.Simas

President and CEO

 

 

 

 

 

1899 W. March Lane,Stockton, California95207 (209) 870-3214

 

**PACIFIC STATE BANCORP**

**1899 W. March Lane**

**Stockton**,**California 95207 **

**NOTICE OF ANNUAL MEETING OF SHAREHOLDERS**

|                                                                       |                                       |                                                                                                                                                            |                      |
|----------------------------------------------------------------------------|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
| Date  and Time                                                             |                                       | 4:30 p.m.,  local time, on June 10, 2010,                                                                                                                  |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Place                                                                      |                                       | Pacific  State Bank

1547  E. March Lane 

  Stockton, California   95210                                                                                       |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Items  of Business                                                         |                                       | (1) To elect the following seven nominees to the  Board of Directors, each for a one-year term and until their successors are  elected and have qualified: |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |
|                                                                       |                                       | Michael  L. Dalton, C.P.A.                                                                                                                                      | Gary  A. Stewart          |
|                                                                       |                                       | Maxwell  M. Freeman                                                                                                                                             | Yoshikazu  Mataga         |
|                                                                       |                                       | Rick  D. Simas                                                                                                                                                  | Patricia  A. Hatton, M.D. |
|                                                                       |                                       | Harold  Hand, M.D.                                                                                                                                              |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       | (2) To transact such other business as may properly come  before the Meeting.                                                                                   |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Annual  Report                                                             |                                       | Our 2009 Form 10-K, which is not a part of the proxy  soliciting material, is enclosed.                                                                         |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Record  Date                                                               |                                       | You can vote if you are a shareholder of record as of  April 20, 2010.                                                                                          |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Quorum                                                                     |                                       | A majority of the shares of common stock entitled to vote  must be represented at the meeting. If there are insufficient shares, the  meeting may be adjourned. |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| Important  Notice Regarding the Internet Availability of  Proxy Materials: |                                       | The 2009 Form 10-K, Proxy Card and Proxy Statement to  shareholders are available at www.proxyvote.com                                                          |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |   |   |
|                                                                       | By  Order of the Board of Directors   |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
| May  20 , 2010                                                             | Dr.  Harold Hand                           |                                                                                                                                                            |                      |
|                                                                       | *Chairman  of the Board*                   |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |
|                                                                       |                                       |                                                                                                                                                            |                      |   |   |   |   |   |   |   |   |

** **

**PACIFIC STATE BANCORP**

**1899 W. March Lane**

**Stockton, California 95207**

 

**NOTICE OF 2010 ANNUAL MEETING OF SHAREHOLDERS**

 

NOTICE IS HEREBY GIVEN TO SHAREHOLDERSthat the 2010 Annual Meeting of Shareholders of Pacific State Bancorp("Bancorp") will be held June 10, 2010, at the main branch of PacificState Bank, 1547 E. March Lane, Stockton, California, at 4:30 p.m. for the followingpurposes:
          -  To elect     the following seven (7) persons as directors of Bancorp for the ensuing     year: Michael L. Dalton, Maxwell M. Freeman, Harold Hand, Patricia Ann     Hatton, Yoshikazu Mataga, Rick D.     Simas and Gary A. Stewart.   See "PROPOSAL     ONE: ELECTION OF DIRECTORS."To     transact any other business which may properly come before the Annual     Meeting and any postponement or adjournment thereof.
        Section 16 of the By-Laws of Bancorpprovides for the nomination of Directors in the following manner:

 

        "Nomination for election of membersof the Board of Directors may be made by the Board of Directors or by anystockholder of any outstanding class of capital stock of the corporationentitled to vote for the election of directors. Notice of intention to make anynominations shall be made in writing and shall be delivered or mailed to thePresident of the corporation not less than 21 days nor more than 60 days priorto any meeting of stockholders called for the election of directors; providedhowever, that if less than 21 days notice of the meeting is given toshareholders, such notice of intention to nominate shall be mailed or deliveredto the President of the corporation not later than the close of business on thetenth day following the day on which the notice of meeting was mailed; providedfurther, that if notice of such meeting is sent by third-class mail aspermitted by Section 6 of these By-Laws, no notice of intention to makenominations shall be required. Such notification shall contain the followinginformation to the extent known to the notifying shareholder: (a) the name andaddress of each proposed nominee; (b) the principal occupation of each proposednominee; (c) the number of shares of capital stock of the corporation owned byeach proposed nominee; (d) the name and residence address of the notifyingshareholder; and (e) the number of shares of capital stock of the corporationowned by the notifying shareholder. Nominations not made in accordance herewithmay, in the discretion of the Chairman of the meeting, be disregarded and uponthe Chairman's instructions, the inspector of elections can disregard all votescast for each such nominee."

 

        Only those shareholders of record at theclose of business on April 20, 2010, will be entitled to notice of and to voteat the Annual Meeting.

 

 

Dated:May 20,2010;                                                                                            By Order of the Board of Directors

 

 

                                  George M. Schofield,Corporate Secretary

 

 

 

**WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASESIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSEDPOST-PAID ENVELOPE, OR VISIT THE WEBSITE  http://www.proxyvote.com.**

 

 

 

 

 

 

 

1899 W. March Lane, Stockton, California 95207 (209)870-3214

 

** **

**PACIFIC STATE BANCORP**

**1899 W. March Lane**

**Stockton, California 95207**

**_____________________**

 

**PROXY STATEMENT**

**____________________**

 

**ANNUAL MEETING OF SHAREHOLDERS**

**To Be Held June 10, 2010**

____________________

** **

**INTRODUCTION**

** **

       This Proxy Statement is furnished to you in connection with the solicitation ofproxies by the Board of Directors of Pacific State Bancorp ("Bancorp") for useat the 2010 Annual Meeting of Shareholders to be held on Thursday, June 10,2010, at 1547 E. March Lane, Stockton, California, at 4:30 p.m., and at anyadjournment or postponement thereof (the "Annual Meeting").  This ProxyStatement and the accompanying proxy card are first being mailed to shareholderson or about May 20, 2010.  

 

**Please vote as soon as possible by completing andsigning the enclosed proxy card.  A business reply envelope is enclosedfor the return of your proxy.**

 

**Your vote is necessary for Bancorp to meet quorumrequirements for the Annual Meeting.**

 

**Failure to meet quorum requirements would requireBancorp to reschedule the Annual Meeting.**

 

**Voting early saves Bancorp time and money.**

 

**Who May Vote?**

 

        Ifyou were a shareholder on the records of Bancorp at the close of business on April20, 2010, you may vote at the 2010 Annual Meeting, either in person, by mail,by telephone, or via the Internet.  On that day, there were 3,722,198shares of our common stock outstanding and entitled to vote.

 

**WhyIs My Vote Important?**

 

        Itis the right of every investor to vote on certain important matters that affectBancorp.  In addition, if you do not submit a proxy or vote in person atthe meeting, it will be more difficult for us to obtain the necessary quorum tohold the meeting.  

 

**How Many Votes Do I Have?**

 

        Each share is entitled to one vote, exceptthat in the election of directors, shareholders shall be entitled to cumulatetheir votes, if requested.  In an election of directors using cumulativevoting, each shareholder is entitled to a number of votes that is equal to thenumber of directors to be elected (which at this Annual Meeting will be seven),multiplied by the number of shares which the shareholder is entitled to vote atthe Meeting.  Each shareholder may cast all of those votes for a singlenominee or divide his or her votes among any number or all of the nominees insuch proportions as the shareholder may choose.

 

**How Will The Board Vote My Proxy?**

 

        A properly signed proxy received by usprior to the meeting, and not revoked, will be voted as marked on the proxy bythe shareholder.  If you do not mark your proxy to indicate how you wantyour shares voted in the Election of Directors, which is the only proposal thatis scheduled to be acted on at the meeting, your shares will be voted **FOR**the candidates nominated by the Board, who are named on the Notice of AnnualMeeting and in this Proxy Statement (Proposal 1).

 

        If any other matter should be presented atthe Annual Meeting upon which a vote may properly be taken, your proxy will bevoted in accordance with the judgment of the holders of the proxy. However, if your shares of Bancorp stock are held in a brokerage account or bya nominee holder, please read the information below under captions "VotingShares Held by Brokers, Banks and Other Nominees" and "RequiredVote" regarding what action you must take to assure that your shares arevoted.

 

**How May I Vote?**

 

        You may vote usingany of the following methods: 

 

***By Mail***

 

        Be sure to complete,sign and date the proxy card/voting instruction card and return it in theprepaid envelope. If you are a shareholder of record and you return your signedproxy card but do not indicate your voting preferences, the persons named inthe proxy card will vote the shares represented by that proxy as recommended bythe Board of Directors. 

 

***By Telephone or the Internet***

 

        The telephone andInternet voting procedures established by Bancorp for shareholders of recordare designed to authenticate your identity, to allow you to give your voting instructions,and to confirm that those instructions have been properly recorded.  Ifyou vote by telephone or on the Internet, you do not have to return your proxycard or voting instruction card. 

 

        You can vote bycalling the toll-free telephone number on your proxy card.  Please haveyour proxy card in hand when you call.  Easy-to-follow voice prompts allowyou to vote your shares and confirm that your instructions have been properlyrecorded.

 

        You can vote byaccessing the Internet website address on your proxy card.  Please haveyour proxy card handy when you go online to ensure that you have theinformation you'll need to complete the voting process and that yourinstructions have been properly recorded.  

 

*        BeneficialHolders.*  The availability of telephone and Internet voting forbeneficial owners depends on the voting processes of your broker, bank or otherholder of record.  Therefore, we recommend that you follow the votinginstructions in the materials you receive. 

 

***In Person at the Annual Meeting***

 

        Direct shareholdersmay vote in person at the Annual Meeting.  You may also be represented byanother person at the Meeting by executing a proper proxy designating thatperson.  Beneficial shareholders, with shares held by your broker, bank orother holder of record, must obtain a legal proxy from your broker, bank orother holder of record and present it to the inspector of elections with yourballot to be able to vote at the Meeting. 

 

**Voting Shares Held by Brokers, Banks and Other Nominees**

 

        If you hold your shares of Bancorp commonstock in a broker, bank or nominee account, you are the "beneficialowner" of those shares, holding them in "street name."  Inorder to vote your shares, you must give voting instructions to your broker,bank, or other intermediary who is the "nominee holder" of yourshares.  

 

        We ask brokers, banks and other nomineeholders to obtain voting instructions from each of you who hold your shares in"street name."  Proxies that are transmitted by brokers or othernominee holders on your behalf will count toward a quorum and will be voted asinstructed by you as beneficial holder of the shares.  

 

        If you fail to provide voting instructionsto your broker or other nominee, your broker, bank or other nominee will havediscretion to vote your shares at the Annual Meeting for the election of theBoard's Director nominees (Proposal 1).

 

**Required Vote**

 

*        Quorum Requirement* .  Ourbylaws require that a quorum - which is the holders of at least a majority ofall of the shares of our common stock entitled to vote at the Annual Meeting -be present at the Meeting, either in person or by proxy, before any businessmay be transacted at the Meeting (other than adjourning the Meeting to a laterdate to allow time to obtain additional proxies to satisfy the quorumrequirement).  

 

*        Voting on the Election of Directors*..  The seven nominees who receive the highest number of votes cast will beelected.  Any shares voted to "Withhold Authority" are notcounted as votes cast in the election of directors.  Broker non-votes,which relate to shares for which "street" or "nominee"holders do not obtain voting instructions from the beneficial holders and forthat reason choose not to vote those shares on a discretionary basis, also arenot counted as votes cast.  However, shares voted to Withhold Authorityand broker non-votes are considered present at the meeting for purposes ofdetermining whether a quorum is present.

 

**Can I Change my Vote?**

 

        Ifyou are a registered owner and have sent in your proxy, you may change yourvote by revoking your proxy at any time before your proxy is voted at theAnnual Meeting by taking any one of the following actions: 

      

 
-  Sending a written notice to revoke your proxy to the CorporateSecretary, Pacific State Bancorp, 1899 W. March Lane, Stockton, California95207.  To be effective, the notice of revocation must be received byBancorp before the Annual Meeting commences. 
-  Transmitting a proxy by mail at a later date than your prior proxy.  To beeffective, that later dated proxy must be received by Bancorp before the AnnualMeeting commences.   
-  Attending the Annual Meeting and voting in person or by proxy in a mannerdifferent than the instructions contained in your earlier proxy. 

      However, if your shares are held by a broker, bank or othernominee holder, you will need to contact your broker, bank or the nomineeholder if you wish to revoke your proxy.

 

**Can I access the Proxy Statement and Annual Report onthe Internet?**

 

        The Notice of Annual Meeting, ProxyStatement, and the 2009 Form 10-K (the "Proxy Materials") areavailable at http://www.proxyvote.com. 

 

**INFORMATION CONCERNING THE SOLICITATION**

 

        This Proxy Statement is furnished to solicit proxies for use at the2010 Annual Meeting of Shareholders (the "Meeting") of Pacific StateBancorp ("Bancorp"), to be held June 10, 2010, at 4:30 p.m. at 1547E. March Lane, Stockton, California, and at any and all adjournments thereof.

 

**Revocability of Proxies**

 

        A form of proxy for voting your shares at the Meeting isenclosed.  If you execute and deliver this proxy, you will still havethe right to and may revoke it at any time before it is exercised by filingwith the Corporate Secretary of Bancorp a written revocation or a duly executedproxy bearing a later date. In addition, you may revoke your proxy by attendingthe Meeting and voting in person.

 

        Subject to your revocation, all shares represented by your properlyexecuted proxy received in time for the Meeting will be voted by the proxyholders in accordance with your instructions specified on theproxy.  UNLESS YOU OTHERWISE DIRECT IN THE ACCOMPANYING PROXY, THESHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THENOMINEES FOR ELECTION OF DIRECTORS NAMED HEREIN.  IF ANY OTHERBUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY WILL BE VOTED INACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.

 

**Persons Making the Solicitation**

 

        The Board of Directors of Bancorp is making thissolicitation.  All associated expenses will be borne byBancorp.  Proxies will be solicited principally by mail, butofficers, directors, and employees of Bancorp may solicit proxies personally orby telephone, without receiving special compensation for suchactivities.  Bancorp will reimburse banks, brokerage houses and othercustodians, nominees and fiduciaries for their reasonable expenses inforwarding these proxy materials to shareholders whose stock in Bancorp is heldof record by such entities.  In addition, Bancorp may employ othersto solicit proxies if management deems it advisable.

 

**Voting Securities**

 

        Bancorp is authorized to issue 24,000,000 shares of Common Stock, nopar value, of which 3,722,198 shares were issued and outstanding as of April20, 2010 (the "Record Date").  All common shares are votingshares, but only shareholders of record as of the Record Date are entitled tonotice of and to vote at the Meeting and at any and all postponements oradjournments of it.  The presence in person or by proxy of the holdersof a majority of the outstanding shares entitled to vote at the Meeting willconstitute a quorum for the purpose of transacting business. 

 

        Each common share is entitled to one vote at the Meeting, except inthe election of directors, in which case California law permits a shareholderor the shareholder's proxy holder to cumulate votes.  Cumulativevoting means that each shareholder has a number of votes equal to the number ofshares owned by the shareholder, multiplied by the number of directors to beelected, and that a shareholder may cumulate such votes for a single candidateor distribute them among as many candidates as the shareholder deemsappropriate.  However, a shareholder may cumulate votes only for acandidate or candidates whose names have been placed in nomination prior to thevoting, and only if the shareholder (or another shareholder) has given noticeat the Meeting, prior to the voting, of the shareholder's intention to cumulatevotes.  Prior to voting, an opportunity will be given for shareholdersor their proxies at the Meeting to announce their intention to cumulate theirvotes.  The proxy holders are given discretionary authority tocumulate votes represented by shares for which they are named in the proxy.

 

        In an election of directors, California law ordinarily provides thatthe nominees receiving the highest number of affirmative votes of the sharesentitled to vote for them, up to the number of directors to be elected by suchshares, are elected; votes against the director and votes withheld have noeffect.

 

**PRINCIPAL SHAREHOLDERS**

 

        Except as listed in the table below,management of Bancorp does not know of any person who owned, as of the RecordDate, beneficially or of record, either individually or together withassociates, five percent (5%) or more of the outstanding shares of the CommonStock of Bancorp.

 

     Name

Amount and Nature of  Beneficial Ownership(1)

Percent of Shares

 

 

 

 

 

 

Maxwell  M. Freeman

1818  Grand Canal Boulevard

Stockton  , CA 95207

 

366,800

 

9.72%

 

Steven  A. Rosso

4868  Saint Andrews

Stockton  , CA 95219

 

339,315

9.12%

 

The  Banc Funds Company, L.L.C.

20  North WackerDrive, Suite 3300

Chicago  , IL 60606

 

358,168

9.62%

 

Harold  Hand, M.D.

36  W. Yokuts, Suite 2 

Stockton  , CA 95207

 

335,188

 

8.89%

 

Michael  L. Dalton, C.P.A.

5345  El Dorado Suite 4

Stockton  , CA 95207

 

202,306

 

5.38%

 

Kathleen  M. Verner      

5685  Black Oak Dr

Stockton  , CA 95212

5,000(2)

.13%

 

 

(1)    A person is considered to own, beneficially, shares of Bancorp if he or she isable to direct how those shares are voted ("voting power") or whetheror not those shares are to be held or disposed of ("dispositivepower").  Any person named in this table is also deemed to own,beneficially, any shares of Bancorp stock that are subject to options that heor she holds if those options are exercisable or will become exercisable at anytime on or before the date which is 60 days after the Record Date, or the dateof the Annual Meeting which is June 10, 2010, and those option shares aredeemed outstanding for computing the shares and percentage ownership of thatperson, but not for computing the percentage ownership of any othershareholder.  Except as otherwise indicated and except for the effect ofcommunity property laws, the persons listed in this table have sole voting anddispositive power with respect to all shares shown as beneficially owned bythem.

 

(2)    Based upon oral communication from Ms. Verneras toownership.

 

 

**PROPOSAL ONE:**

**ELECTION OF DIRECTORS**

** **

**(Item 1 on the Proxy Card)**

 

        At the Annual Meeting, seven directors will beelected to hold office until the next Annual Shareholders Meeting is held oruntil their successors are elected and have qualified to serve.  The Boardof Directors has nominated the persons named below forelection to the Board.  All of these nominees are an incumbentdirector who was elected to his or her position on the Board by Bancorp'sshareholders at the 2009 Annual Meeting and each has consented to serve as adirector, if re-elected.  Unless otherwise instructed, the proxy holdersnamed in the enclosed proxy intend to vote the proxies received by them for theelection of all seven of these nominees.  If, prior to the Meeting, anyBoard nominee becomes unable to serve as a director, the proxy holders willvote the proxies received by them for the election of a substitute nomineeselected by the Board of Directors.  

 

        The Bylaws of Bancorp fix the number of directorsof Bancorp within the range of nine and seventeen; the exact number is set atnine until changed by resolution of the Board of Directors or Bylaw amendmentduly adopted by Bancorp's shareholders or the Board of Directors.

 

**Information ConcerningDirectors**

 

        The tablebelow provides information concerning the nominees of the Board of Directorsfor election as directors of Bancorp.  The persons named are allcurrent members of the Board of Directors, and will be nominated for electionas directors at the Meeting, to serve until the 2011 Annual Meeting ofshareholders and until their successors are elected and have qualified.

        

        Unless otherwise directed, theproxy holders will cast votes so as to effect, if possible, the election of theseven nominees.  The seven nominees receiving the most votes will beelected.  If any nominee is unable to serve as a director, the proxywill be voted to elect a substitute nominee designated by the Board ofDirectors. The Board of Directors has no reason to believe that any of thenominees will be unable to serve if elected. Additional nominations may only bemade by complying with the nomination procedures that are included in theNotice of Annual Meeting of Shareholders accompanying this Proxy Statement.
 Vote Required and Recommendation of the Boardof Directors
 

        The sevennominees receiving the most votes from holders of shares of common stockpresent or represented by proxy and entitled to vote at the Meeting will beelected to serve as directors of Bancorp for the ensuing year.  As aresult, shares as to which the authority to vote is withheld, which will becounted, and broker non-votes, which will not be counted, will have no effecton the outcome of the election of directors.

    

       If any person other than the Board's nominee is nominated for election to theBoard, the proxy holders will have the discretion to allocate and cast the votesrepresented by the proxies they hold among the nominees named below for whichauthority has not been withheld in any such proxies in such proportions as theydeem appropriate in order to elect as many of the Board's nominees as ispossible.

 

**Record date; Voterequired**

 

Only Bancorp shareholders of record at the close of businesson April 20, 2010 are entitled to notice of and to vote at the Annual Meeting.On April 20, 2010, there were 3,722,198 shares of our common stock outstandingand entitled to vote at the Annual Meeting, held of record by approximately 261persons, excluding those shares held by brokers in "street-name."

 

**Each shareholder of record is entitled to one vote foreach share held on all matters to come before the Annual Meeting. You may votein person, by submitting a properly executed proxy, by calling a toll free telephonenumber or by accessing an Internet website listed on your proxy card.** The presence, in person or by properly executed proxy, of the holders of atleast fifty-percent of all the outstanding shares of our common stock willconstitute a quorum.  Abstentions and broker non-votes will be treated asshares present at the annual meeting for purposes of determining the presenceof a quorum. A broker non-vote is an unvotedproxysubmitted by a broker. Under applicable rules, brokers or other nominees who holdshares in street name for customers who are the beneficial owners of suchshares may not vote those shares with respect to the election of directorsunless they have received specific instructions from their customers.

 

To elect the directors, the holders of a majority of theoutstanding shares of our common stock entitled to vote must vote in favor ofthe individual nominees. Consequently, a failure to vote, an abstention or abroker non-vote will have the same effect as voting against the individualnominees. Adoption of any proposal to adjourn the Annual Meeting to a laterdate requires that a majority of the votes cast at the Annual Meeting must votein favor of the proposal to adjourn the Annual Meeting.  Accordingly,abstentions will have the same effect as voting against the proposal to adjournthe Annual Meeting. Broker non-votes will have no effect on this proposal.

 

_____________________

 

**THE BOARD OF DIRECTORS RECOMMENDSA VOTE "FOR" THE ELECTIONOF EACH OF THE NOMINEES NAMED BELOW.**

_____________________
 Director Nominees
 

        Set forthbelow are the names and a brief description of the nominees of the Board ofDirectors for election as directors of Bancorp.  The persons namedare all current members of the Board of Directors, and will be nominated forelection as directors at the Meeting, to serve until the 2011 Annual Meeting ofshareholders and until their successors are elected and have qualified.

 

        Unlessotherwise directed, the proxy holders will cast votes so as to effect, ifpossible, the election of the seven nominees.  The seven nomineesreceiving the most votes will be elected.  If any nominee is unableto serve as a director, the proxy will be voted to elect a substitute nomineedesignated by the Board of Directors. The Board of Directors has no reason tobelieve that any of the nominees will be unable to serve if elected. Additionalnominations may only be made by complying with the nomination procedures thatare included in the Notice of Annual Meeting of Shareholders accompanying thisProxy Statement.

 

**MichaelL. Dalton, C.P.A.**, age 63, has served as a Director of Bancorp since1987.  Mr. Dalton is a Certified Public Accountant, Certified FinancialPlanner and Registered Investment Adviser.

 

**Maxwell M. Freeman**, age 72, has served as a Director of Bancorpsince 2000.  Mr. Freeman is an Attorney at the law firm Freeman,D'Aiuto, Pierce, Gurev, Keeling& Wolf , in Stockton, California.

 

**Harold Hand, M.D.**, age 72, has served as a Director of Bancorpsince 1987.  Dr. Hand is a physician practicing ophthalmology. He is theowner and operator of the Advanced Vision Institute, Inc. and Staff member ofDameron Hospital.

 

**Patricia A. Hatton, M.D**, age 60, has served as a Director ofBancorp since 1988.  Dr.  Hatton is a physician practicing obstetricsand gynecology.

 

**Yoshikazu Mataga**, age 67, has servedas a Director of Bancorp since 1987.  Mr. Matagais the owner and operator of Matagaof Stockton.

 

**Rick D. Simas**, age 49, has served asa Director of Bancorp since 2009.  Mr. Simasisthe President and Chief Executive Officer of Bancorp.

 

**Gary A. Stewart,** age 60, has served as a Director of Bancorpsince 1998.  Mr. Stewart is the Executive Vice President and Chief CreditOfficer of Bancorp.

   

        Thefollowing members of the Board of Directors, comprising more than a majority,have been determined by the Board to be "independent" in accordancewith Marketplace Rule 4200(A)(15) of the NASD: Michael L. Dalton, C.P.A.,Maxwell Freeman, Harold Hand, M.D Patricia A. Hatton, M.D., and YoshikazuMataga.

 

**Stock Ownership of Management**

 

        The following table lists, as of theRecord Date, the number and percentage of shares of Common Stock beneficiallyowned by each director, each nominee, each Named Executive Officer identifiedin the compensation discussion below and by the directors and principalofficers of Bancorp as a group.  The table does not include 125,722shares held beneficially by Bancorp officers as administrators of the PacificState Bank 401(k) Savings Plan.  None of the shares are pledged assecurity.

 

 

 

**Beneficial Owner**

 

 

 

**Amount and Nature of Beneficial Ownership (1)**

 

 

**Percent of Class**

 

Michael  L. Dalton, C.P.A.

  102,036(34,136)
1,920

  2.74%
 

Maxwell  M. Freeman

366,800(50,000)

-

9.85%

 

Justin  R. Garner

1,153

-

*

 

Harold  Hand, M.D.

335,188(50,000)

19,680

9.01%

 

Patricia  A. Hatton, M.D.

183,250(50,000)

28,616

4.92%

 

Yoshikazu  Mataga

146,308 (30,000)

-

3.93%

 

George  M. Schofield, C.P.A

15,679

-

*

 

Rick  D. Simas

30,800(30,800)

-

*

 

Gary  A. Stewart

62,283(62,283)

-

  1.67%
 

Kathleen  M. Verner

25,000(20,000)

-

*

 

All  directors, nominees and principal officers as a group (10 in all)(2)

 

1,368,497(327,219)

 

50,216

 

34.08%

(*) indicates less than 1%

 

(1)  The first number in the firstsubcolumn indicates the total number of shares beneficiallyowned, including (as specified by the number in the parenthesis) the number ofshares that could be acquired pursuant to stock options exercisable within 60days of the Record Date.  Numbers in the second subcolumnindicate the number of shares (out of the total number of shares beneficiallyowned) as to which the person or group shares voting and/or investment power.

(2)  Named Executive Officers included arethe President and Chief Executive Officer, Executive Vice President and ChiefCredit Officer, and Vice President and Chief Financial Officer.

 

**Options Outstanding and Available for Issuance atYear-End**

 

The following table provides informationas of December 31, 2009 with respect to compensation plans (includingindividual compensation arrangements) under which equity securities of Bancorpare authorized for issuance under Bancorp's 1997 Stock Option Plan.

 

**Plan category**

**Number of securities to be issued upon exercise of  outstanding options, warrants and rights**

 

 

**(a)**

 

**Weighted-average exercise price of outstanding  options, warrants and rights**

 

**(b)**

**Number of securities remaining available for  future issuance under equity compensation plans (excluding securities reflected  in column (a))**

 

**(c)**

**Equity compensation plans approved by security  holders**

  501,069
$7.40

 

0

 

**Equity compensation plans not approved by security  holders**

None

NA

NA

 

**Total**

 

 

  501,069

 

 

$7.40

 

0

 

**THE BOARD OFDIRECTORS**

 

**Meetings of the Board of Directors**

 

Bancorp's Board of Directors held 12meetings during 2009. The following members of the Board of Directors,comprising more than a majority, have been determined by the Board to be"independent" in accordance with Marketplace Rule 4200(A)(15) of theNASD: Michael L. Dalton, Maxwell Freeman, Harold Hand, M.D., Patricia A.Hatton, M.D., and Yoshikazu Mataga. The independentmembers of the Board met together in four regularly scheduled meetings during 2009at which only independent directors were present.  In addition tomeeting as a group to review Bancorp's business, members of the Board ofDirectors served on certain standing committees. During 2009, all members ofthe Board of Directors, except for Mrs. VernerandMr. Freeman, attended more than 75% of the aggregate of the number of meetingsheld by the Board of Directors and of all committee meetings on which he or sheserved.

 

**BoardLeadership Structure**

 

           The Board of Directors is committed to maintaining an independent Board, andfor many years a majority of the Board has been comprised of independentdirectors. It has further been the practice of Bancorp to separate the roles ofChief Executive Officer and Chairman of the Board in recognition of thedifferences between the two roles. The Chief Executive Officer is responsiblefor setting the strategic direction for Bancorp and the day-to-day leadershipand performance of Bancorp. The Chairman of the Board is responsible forproviding guidance to the Chief Executive Officer, setting the agenda for Boardmeetings, presiding over meetings of the full Board (including executivesessions), and facilitating communication among the independent directors andbetween the independent directors and the Chief Executive Officer. The Boardfurther believes that the separation of the duties of the Chief ExecutiveOfficer and the Chairman of the Board eliminates any inherent conflict ofinterest that may arise when the roles are combined, and that an independentdirector who has not served as an executive of Bancorp can best provide thenecessary leadership and objectivity required as Chairman of the Board. 

**Board Authority for Risk Oversight**

 

           The Board has ultimate authority and responsibility for overseeing riskmanagement of Bancorp. The Board monitors, reviews and reacts to materialenterprise risks identified by management. The Board receives specific reportsfrom executive management on financial, credit, liquidity, interest rate, capital,operational, legal compliance and reputation risks and the degree of exposureto those risks. The Board helps ensure that management is properly focused onrisk by, among other things, reviewing and discussing the performance of seniormanagement and business line officers. 

 

          Board committees have responsibility for risk oversight in specific areas. TheAudit Committee oversees financial, accounting and internal control riskmanagement policies. The Audit Committee approves the independent auditor andits annual audit plan. The Audit Committee reports periodically to the Board onthe effectiveness of risk management processes in place and the overall riskassessment of Bancorp's activities. The Personnel Committee assesses andmonitors risks in Bancorp's compensation program. The Corporate Governance andNominating Committee recommends director candidates with appropriate experienceand skills who will set the proper tone for Bancorp's risk profile and providecompetent oversight over our material risks. 

 

**Committees of the Board of Directors**

 

        TheBoard has six standing committees: an Audit Committee, a Personnel/CompensationCommittee, a Director Loan Committee, Compliance Committee, Asset and LiabilityCommittee and a Nominating Committee.  Information regarding the membersof each of those Committees and their responsibilities and the number ofmeetings held by those Committees in 2009 is set forth below.

 

**Audit Committee and Audit Committee Financial Expert**

 

        The AuditCommittee held 12 meetings during 2009. The Audit Committee consists of thefollowing members of Bancorp's Board of Directors:  Patricia Hatton,Michael A. Dalton, Yoshikazu Mataga, and GeorgeSchofield. Michael A. Dalton, CPA is the designated audit committee financialexpert.  This designation is based upon his experience as a certifiedpublic accountant.   Each of the members of the Committee isindependent as defined under Rule 4200(a)(15), meets the criteria forindependence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act(subject to the exemptions provided in Rule 10A-3(c)), has not participated inthe preparation of the financial statements of Bancorp or any of its currentsubsidiaries at any time during the past three years, and is able to read andunderstand fundamental financial statements, including a Bancorp's balancesheet, income statement, and cash flow statement. The Board has adopted awritten charter to govern the Committee's operations which complies with therequirements of Marketplace Rule 4350(d)(1).  The Audit Committee'sCharter provides that the Committee must pre-approve services to be performedby the Bancorp's independent public accountants.  Additionally, theCommittee will consider on a case-by-case basis and, if appropriate, approve specificengagements that are not otherwise pre-approved.

     

        TheCommittee's responsibilities include providing advice with respect to Bancorp'sfinancial matters and assisting the Board of Directors in discharging itsresponsibilities regarding corporate accounting. The Committee's primaryresponsibilities are to: (1) serve as an independent and objective party tomonitor Bancorp's financial reporting process and internal control system; (2)review and evaluate the audit efforts of Bancorp's independent accountants andinternal auditor; (3) evaluate Bancorp's quarterly financial performance aswell as its compliance with laws and regulations; (4) oversee management'sestablishment and enforcement of financial policies and business practices; and(5) facilitate communication among the independent accountants, financial andsenior management, counsel, the internal auditor** **and the Board ofDirectors.

 

**Personnel/Compensation Committee**  

 

       The members of the Personnel/Compensation Committee are: Yoshikazu Mataga, Michael A. Dalton, and Harold Hand.  Thepurpose of the Personnel/Compensation Committee is to discharge the Board's (ashereinafter defined) responsibilities relating to compensation of Bancorp's andPacific State Bank's Chief Executive Officer ("Chief ExecutiveOfficer" or "CEO"), executive officers and members of the Boardsof Directors of Bancorp and Pacific State Bank (together, the"Board"). The Committee is responsible for the development,implementation, approval, evaluation and oversight of (1) CEO and executiveofficer compensation plans, (2) all compensation plans involving issuance ofBancorp's stock or other securities, and (3) director   and personnelcompensation plans. The term "executive officers", as used herein,shall mean those employees who are "named executive officers"pursuant to Item 402(a) of SEC Regulation S-K. The term "director",as used herein, shall mean directors of Bancorp and/or the Bank.  ThePersonnel/Compensation Committee held one meeting during 2009.

 

**Personnel/Compensation Committee Interlocks and InsiderParticipation**

 

Mr. Simas doesnot, due to his membership on the Committee, hold a position as a board memberof or with the responsibility for the compensation matters of any other entity.

 

**Director Loan Committee**

 

The members of the Loan Committee are:Patricia Hatton, Michael Dalton, Maxwell Freeman, Yoshikazu Mataga,Rick Simas, Gary Stewart, KathleenVerner, and George Schofield.  The Director LoanCommittee reviews and decides whether or not to approve any loan in an amountthat exceeds management's lending authority to any single borrower, reviewsdelinquent loans, and recommends any changes to Pacific State Bank's loanpolicy that it deems to be appropriate.  The Director Loan Committee ofthe Board held twenty-four meetings during 2009.

 

**Compliance Committee**   

 

The members of the Compliance Committeeare Michael A. Dalton, Yoshikazu Mataga, GeorgeSchofield and Patricia Hatton.  The Compliance Committee is charged withthe oversight and compliance by Bancorp and Pacific State Bank with the termsof the written agreement dated February 18, 2009.  The ComplianceCommittee of the Board held twelve meetings during 2009.

 

**Asset and Liability Committee**

** **

The members of the Asset and LiabilityCommittee are: Michael A. Dalton, Rick Simas, andGary Stewart.  The purpose of the asset and liability committee is tocommunicate, coordinate and control asset/liability management consistent withPacific State Bank's business plan and board-approved policies. The objectivesare to manage assets and funding sources to produce results that are consistentwith liquidity, capital adequacy, growth, risk and profitability goals. TheAsset and Liability Committee of the Board held quarterly meetings during 2009.

 

**Nominating Procedures and Policies**

 

Bancorp has a standing NominatingCommittee, comprised of at least three independent directors; the currentmembers of the Nominating Committee include all independent members of theBoard of Directors.  These directors are appointed annually by theindependent members of the board.  Director independence isdetermined in accordance with Marketplace Rule 4200(A)(15) of theNASD.  Under this definition, an independent director is a personother than an officer or employee of Bancorp or its subsidiaries or any otherindividual having a relationship that, in the opinion of the Bancorp's Board ofDirectors, would interfere with the exercise of independent judgment incarrying out the responsibilities of a director. Types of persons deemed not tobe independent include (but are not limited to) employees of Bancorp or PacificState Bank; persons (or their family members or affiliate entities) compensatedfor services other than as a director; and persons (or their family members)who are partners or employees of Bancorp's independent auditors.  Thenominating committee held one meeting during 2009. The nominating committee'sactivities are governed by a charter adopted by the Board of Directors.

 

Bancorp's bylaws prescribe the proceduresfor direct shareholder nominations of directors. These procedures are reprintedin the Notice of Annual Meeting that accompanies this proxy statement. In hisdiscretion, the chairman of the Annual Meeting may disregard nominations notmade in accordance with these procedures and instruct the inspector ofelections to disregard all votes cast for such nominees. As a matter of policy,the Board of Directors will consider for inclusion in Bancorp's proxy statementnominees made in accordance with these procedures and submitted to Bancorp onor before the deadline specified by regulation of the Securities and ExchangeCommission for mandatory inclusion of shareholder proposals. For purposes ofthe 2011 Annual Meeting, that date will be December 15, 2010.

 

Each candidate considered by theNominating Committee is required to complete one or more questionnaires and toprovide any additional information which the Nominating Committeeconsiders necessary, including a personal financial statement and abackground investigation by an outside firm.

 

Candidates are evaluated based on thecriteria established by the Nominating Committee, which may include suchcriteria as a satisfactory background investigation, experience and expertise,financial resources, time availability and community involvement.Candidates selected for consideration as nominees must meet with theNominating Committee and thereafter with the Board of Directors.

 

Any candidates nominated for election tothe Board of Directors, including existing members, must be recommended to theBoard of Directors by the majority vote of approval of the members of theNominating Committee and receive a majority of votes in favor ofnomination from independent members of the Board of Directors. 

 

**Director Independence**

 

**       **TheBoard has determined that, other than Rick SimasandGary Stewart, each member of the Board is independent under the NASDAQ'sdefinition of independence. In reaching this conclusion, the Board consideredthe relevant facts and circumstances with respect to any direct or indirectrelationships between Bancorp and each of the non-management directors,including those disclosed below under the section entitled "CERTAINTRANSACTIONS."  The Board determined that any relationships that nowexist, or may have existed in the past between Bancorp and any of thenon-management directors, were immaterial.  

 

**Term of Office of Directors**

 

       All of Bancorp's directors are elected at each Annual Meeting of Shareholdersfor a term of one year and until their respective successors are elected andqualify to serve on the Board.  If a vacancy occurs in any Board positionbetween Annual Meetings, the Board may fill the vacancy by electing a newdirector to that position.  The Board may also create a new director positionand elect a director to hold the newly created position for a term ending atthe next Annual Meeting of Shareholders.  

 

**Communications with the Board**

 

Any shareholder who wishes to communicatewith the Board or with any committee or individual member may write to thePresident and Chief Executive Officer at 1899 W. March Lane, Stockton,California 95207, Attention: Board Administration. The letter should indicatethat the author is a shareholder and, if shares are not held of record, shouldinclude appropriate evidence of stock ownership. Depending on the subjectmatter, management will:

 
-   Forward the communication to theBoard or the director or committee to whom it is addressed; 
-   Attempt to handle the inquirydirectly, for example, if it is a request for information about Bancorp orconcerns a stock-related matter; or 
-   Not forward the communication if itis primarily commercial in nature, relates to an improper or irrelevant topic,is hostile, threatening, illegal or otherwise inappropriate, or is otherwiseunrelated to the activities, functions and responsibilities of the board. 

**Attendance at Annual Meetings**

        

        All of Bancorp's directors are expectedand encouraged to attend Annual Meetings to the extent possible consistent withtheir other obligations.  All of the directors, with the exception ofKathleen Verner, attended the 2009 Annual Meeting.

 

**Code of Conduct**

 

**       **The Board has also adopted a Code ofEthics that applies to all of our employees, officers and directors. A copy ofthe Code, which complies with the definition of a "code of ethics"under section 406(c) of the Sarbanes-Oxley Act of 2002 and the requirements ofMarketplace Rule 4350(n), is available upon request to anystockholder.  Requests should be addressed in writing to Rick D. Simas, Chief Executive Officer, Pacific State Bancorp, 1899W. March Lane, Stockton, CA 95207.

 

**Copyof Bylaw Provisions**  

 

        You may contact Bancorp's Corporate Secretary for a copy of the relevant Bylawprovisions regarding the requirements for making shareholder proposals andnominating director candidates. 

 

**DIRECTORCOMPENSATION**

 

**Overview**

 

Ourdirector compensation program is designed to attract and retain qualified,independent Directors to represent our shareholders on the Board and act in theirbest interest. The Personnel Committee, which consists solely of independentDirectors, has responsibility for reviewing and recommending any changes to ourDirector compensation program. All recommended compensation changes requireapproval or ratification by the full Board of Directors. Compensation for themembers of our Board is reviewed annually by the Compensation Committee. 

 

AsNamed Executive Officers for fiscal year 2009, compensation information for Mr.Simas, President and Chief Executive Officer, and Mr.Stewart, Executive Vice President and Chief Credit Officer, can be found in theexecutive compensation disclosure tables provided within this Proxy Statement.Employee Directors do not receive compensation for their service as Directors. 

 

Effective August 1, 2009, the non-employeedirectors suspended the payment of monthly fees for service as adirector.

 

**Board of Directors Compensation Table for 2009**

 

The following table provides compensationinformation for the one year period ended December 31, 2009 for eachnon-employee member of Bancorp's Board of Directors as of thatdate.  Compensation information regarding the management directors(Rick D. Simasand Gary A. Stewart) is included inthe Summary Compensation Table.  

 

   

** **

**Fees Earned or**

** **

 

 

 

**Name**

** **

**Paid in Cash**

** **

** **

**Total**

** **

**Michael  L. Dalton, C.P.A.**

 

$

24,500

 

 

$

24,500

 

**Maxwell  M. Freeman**

 

$

24,500

 

 

$

24,500

 

**Harold  Hand, M.D.**

 

$

24,500

 

 

$

24,500

 

**Patricia  A. Hatton, M.D**

 

$

24,500

 

 

$

24,500

 

**Steven  J. Kikuchi**

 

$

24,500

 

 

$

24,500

 

**Yoshikazu  Mataga**

 

$

24,500

 

 

$

24,500

 

**Russell  G. Munson**

 

$

24,500

 

 

$

24,500

 

**Kathleen  M. Verner**

 

$

24,500

 

 

$

24,500

 

**George  Schofield**

 

$

14,000

 

 

$

14,000

 

          

(1) In February of 2009George Schofield became a director of Pacific State Bancorp.

 

**EXECUTIVE OFFICERS**

 

**Rick D. Simas**, age 49, has served asa Director of Pacific State Bank and Bancorp since 2009.  Mr.Simas is the President and Chief Executive Officer ofBancorp and Pacific State Bank.

 

**Gary A. Stewart,** age 60, has served as a Director of PacificState Bank and Bancorp since 1998.  Mr. Stewart is the Executive VicePresident and Chief Credit Officer of Pacific State Bank and Bancorp.

 

**Donald Kalkofen**, age 46, has beenhired, effective April 28, 2010, as the Vice President, Director of Finance ofPacific State Bank and Bancorp.

 

**EXECUTIVE COMPENSATION AND RELATEDMATTERS**

 

**EXECUTIVE COMPENSATION**  

 

The following section describes thecompensation that Bancorp pays its Chief Executive Officer, Chief FinancialOfficer and each other named executive officer who in 2009 earned totalcompensation exceeding $100,000 (the "Named Executive Officers"),consisting of the following persons. 

 
-  Rick Simas, Chief ExecutiveOfficer 
-  Justin  Garner, Vice President & Chief Financial Officer 
-  Gary  Stewart, Executive Vice President & Chief Credit Officer 

This section includes:
-  the  Compensation Discussion and Analysis ("CD&A") of management on  executive compensation; 
-  the  Summary Compensation Table and other tables detailing the compensation of the  Named Executive Officers; and 
-  the  narrative disclosure about various compensation plans and arrangements, and  post employment and termination benefits. 

 

**Compensation Discussion and Analysis** 

 

The Board has a CompensationCommittee ("the Committee") which is responsible for reviewing andapproving Bancorp's overall compensation and benefit programs and for reviewingand setting the Chief Executive Officer's compensation package.  Theobjectives of Bancorp's overall compensation programs are to attract, motivateand retain executive officers by structuring appropriate and competitive totalcompensation, when compared to positions of equivalent responsibility and tosimilar publicly owned banks.  

 

**ExecutiveCompensation Philosophy**  

 

   The quality of our Bancorp's officers and employees, including our executiveteam, is critical to executing our community banking philosophy of emphasizingpersonalized service, combined with the full resources of a bankingorganization. To meet our primary goal of attracting, retaining andincentivizing highly-qualified executives, officers and employees within thecontext of our corporate culture, our compensation programs are designed withthe following principles in mind: 

 
-  We are committed to providing effective compensation and  benefit programs that are competitive both within our industry and within  other relevant organizations with whom Bancorp competes for employees. 
-  Our compensation and benefit programs are designed to  encourage and reward behaviors that ultimately contribute to the achievement  of organizational goals. 
-  Our compensation and benefit programs and practices support  and reinforce our commitment to provide a work environment that promotes  respect, teamwork, and individual growth opportunities. 

Consistent with this overall philosophy, wehave designed our executive compensation programs to be relativelystraightforward, while providing benefits attractive enough to attract, retainand motivate highly qualified employees.  The principal components of ourcompensation package for executives are: 

 
-  Base  salary 
-  Bonus  compensation 
-  Long-term  incentives-stock options 
-  Retirement,  termination and change in control benefits 
-  Other  general employee benefits 

        Except as described below, we have notadopted any specific policies or guidelines for allocating compensation for ourexecutives between short-term and long-term incentives or between cash and non-cashcompensation.  However, our philosophy is to tie a significant percentageof our executives' compensation to the achievement of Bancorp's financial andperformance goals.  Accordingly, base salaries are set at competitivelevels, with an opportunity for each executive to be rewarded through bonusesand stock option grants.

 

**Process for Determining Compensation**  

 

        The Chief Executive Officer reviewsBancorp's overall executive compensation program, and makes recommendationsregarding individual compensation, in the context of a "total compensationpolicy" that takes into account the overall package of compensationbenefits provided to each executive, other than himself.  Theserecommendations are presented to the Board and approved through Bancorp'sannual budget process.

        

        The Committee typically meetsannually to perform a review of our Chief Executive Officer's overallcompensation package, including determination of a bonus award for the pastfiscal year and adjustment of base salary.  The Committee comparesexecutive compensation levels against other publicly owned banks whendetermining the Chief Executive Officer's compensation.  This groupconsists of banks which compete for a similar pool of executive talent.

 

**Discussion of Executive Compensation Components**  

 

*BaseSalary*  

 

        We provide executives, officers and otheremployees with a base salary to compensate them for services rendered duringthe year.  Base salaries for executives are determined for each positionbased in part on market data.  In the review of base salaries forexecutives, these factors are considered: 

 
-  Salary  ranges based on available market data, including market data provided by  consultants, as appropriate  
-  Internal  review relative to others within Bancorp 
-  Individual  and Bank performance 
-  Experience  and qualifications of each individual 

        Salary levels are reviewed annually as partof an executive performance review.  Promotion and other changes in jobresponsibility are also reviewed at that time.

 

*BonusCompensation*

 

        Performance-based bonuses comprise acomponent of the overall compensation package for each executive officer. The bonus of each executive officer is contingent upon satisfaction of bothquantifiable and non-quantifiable performance measures established by the CEOand the Committee.  Performance measures include Profitability, DepositGrowth, Asset Quality, Asset Growth, Loan Growth, Performance Compared toBudget and adherence to the Long Term Plan (long-term growth of shareholders'value), and other measures, as needed, based on the performance of Bancorp.

 

*        Chief Executive Officer*..  The bonus for the Chief Executive Officer is a separate process tied tosubjective as well as objective factors.  The Committee considers theperformance factors as set forth above as well as other measures such as:

 
-  Overall  supervision of Bancorp 
-  Credit  quality of Bancorp 
-  Effective  communication of our overall goals and objectives to employees 
-  Growth  of Bancorp 
-  Shareholder  relations 

*        Chief Financial Officer . *Our Chief Executive Officer typically determines the base salary and bonus forour Chief Financial Officer at the same time as the other executive officers'compensation is determined.  This determination is based on a variety ofobjective and subjective factors, including the same Bank performance factorslisted above for Named Executive Officers as well as individual performance. 

 

*Long-TermIncentives-Stock Options*

 

        The compensation package of executivegrantees includes a long-term incentive component in the form of grants ofstock options under Bancorp's 1997 Stock Options Plan which expired in2007.  We believe stock ownership more closely aligns executive andBancorp long-term goals, and in particular provides an incentive for executivesto help build shareholders' value. We also believe this program provides aretentive effect by enabling executives to share in the benefits of stock priceappreciation.  

 

        Under Bancorp's 1997 Stock Options Plan,which expired as of 2007, the Board allocates 30% of the outstanding shares ofBancorp to be set aside for the grant of options to Board members, the CEO, theexecutive officers, and other Pacific State Bank officers and employees. Grants have been made at the commencement of Bancorp's business, thecommencement of employment by new executive officers, the commencement ofemployment by other Pacific State Bank officers and employees, and after thesale of shares pursuant to a campaign to raise capital for Bancorp.  

 

*RetirementBenefits*

        

       Bancorp has two retirement plans. Bancorp's 401(k) Plan (the"401(k) Plan") is a qualified retirement plan under the InternalRevenue Code of 1986 as amended (the "Code") and is open to allemployees of Bancorp with at least thirty days of service.  In 2009,Bancorp matched 50% of the first 6% of employee salary contributions to the401(k) Plan, up to a maximum salary contribution of $16,500 per employee.

       

        Bancorp also has a Salary ContinuationAgreement program which provides retirement benefits for the executive officersof Bancorp.* *See "Salary Continuation Agreements" below

.

 

*Termination and Change of Control Benefits*

 

        Bancorp also has entered into employmentcontracts and change in control agreements with certain executive officers thatallow for severance payments upon termination without cause or upon terminationfollowing a change in control of Bancorp.  These two differentterminations provide for payments equal to twelve and twenty four months,respectively, of current base salary and a pro rata bonus.  Thesearrangements are intended to retain our executives that could have other jobalternatives that may appear to them to be less risky absent thesearrangements, particularly given the significant level of acquisition activityin the banking sector.  All of Bancorp's change in control arrangementsare "double trigger," meaning that benefits are not awarded upon achange of control unless the executive's employment is terminated due to anadverse change in the employment relationship following the transaction. We believe this structure strikes a balance between the incentives and theexecutive retention effects described above, without actually providing thesebenefits to executives who continue employment with an acquiring company in theevent of a change of control transaction. 

 

        The above summary of terms is furtherdescribed under the heading "Employment Agreements and Potential PaymentsUpon Termination or Change-in-Control" below.

Executive officers are eligible to participatein all employee benefit plans that are available to eligible employeesgenerally including, health insurance, life, disability insurance, and 401(k)matching contributions. 

 

**2009 Executive Compensation**  

 

*2009 Base Salary*

 

       Effective January 1, 2009, Rick Simasreceived a basesalary increase from $115,000 to $193,000.  Effective July 17, 2009 RickSimas received a base salary increase from $193,000 to$200,000.

 

        Effective January 1, 2009, Messrs. JustinGarner received base salary increases from $95,000 to $130,000 and Gary Stewartreceived a base salary increase from $191,625 to $193,000.

 

*2009 Bonus Compensation*  

 

        No bonus compensation was paid to theNamed Executive Officers in 2009.

 

*Long-TermIncentives*  

 

        No grants of stock options were made tothe Named Executive Officers in 2009. 

 

**Summary Compensation Table (2009)**

 

        Thefollowing table includes information concerning compensation for the one yearperiod ended December 31, 2009 in reference to the named executive officers ofBancorp.

 

   

**Year**

**Salary**

**Bonus (1)**

**Option Awards**

**Change in Net Preset Value of Pension Benefits**

**All Other (2)**

**Total**

Rick  D. Simas

2009

     2008

2007

 

$196,483

$112,500

$110,438

 

-

$2,000

-

-

$19,000

$22,680

 

$17,674

$15,541

$13,609

 

$21,632

$51,683

$31,530

 

$235,789

$198,724

$180,257

 

President  and Chief Executive Officer (3)

 

Gary  A. Stewart

Executive  Vice President and Chief Credit Officer

 

 

 2009

2008

2007

 

$193,000

$191,625

$186,490

 

 

-

$25,000

$60,000

 

 

-

$68,907

$82,688

 

 

$96,780

$85,120

$74,566

 

 

$11,195

$21,678

$27,419

 

 

$301,475

$392,330

$431,163

 

Justin  R. Garner

Vice  President and Chief Financial Officer (4)

 

 

2009

2008

 

$130,000

$95,000

 

5,000

-

 

-

-

 

-

-

 

$10,902(5)

$18,955

 

$140,902

$113,955

Steven  A. Rosso

President  and Chief Executive Officer (6)

 

 

2009

2008

2007

 

$302,258

$294,000

$280,500

 

 

-

$100,000

$150,000

 

 

-

$111,467

$133,760

 

 

-

-

$54,791

 

 

$31,566

$33,375

$21,130

 

 

$333,824

$538,842

$640,181

 

JoAnne  C. Roberts

Senior  Vice President and Chief Financial Officer (7)

 

2009

2008

2007

 

 

$84,149

$109,000

 

 

 

$20,000

$30,000

 

 

 

-

$14,592

 

 

 

-

$29,388

 

 

 

$8,040

$17,078

 

 

 

$112,189

$200,058

 

 

(1)   

Bonuses  paid in the first quarter based on prior year results.

(2)   

Includes  calculated value of personal use of bank automobile, personal benefit derived  from club memberships, cash incentive programs, 401(k) matching  contributions, and premiums paid for life insurance policies.

(3)   

Rick  D. Simasserved in a different capacity with  Bancorp until December 27, 2008 when he was appointed President of Pacific  State Bancorp.

(4)   

Justin  R. Garner served in a different capacity with Bancorp until December 18,  2008, when he was named Chief Financial Officer of Pacific State  Bancorp.  Effective April  30, 2010, Mr. Garner resigned as CFO and  Donald Kalkofenwas hired to replace him as of  April 28, 2010.  

(5)   

Justin  R. Garner received a $5,000 cash payment in lieu of agreed upon grant of  equity.

(6)   

Steven  A. Rossoresigned effective December 27, 2008.

(7)   

JoAnne  C. Roberts passed away on September 1, 2008.

 

**Grants of Plan-Based Awards for 2009**

 

        There were no options granted during or for the calendar yearended December 31, 2009 to any of the executive officers listed in the SummaryCompensation Table. 

 

**Outstanding EquityAwards at December 31, 2009**

 

        The following table includes certain information withrespect to the value at the calendar year end December 31, 2009 of allunexercised options previously awarded to any of the executive officers namedabove.

 

   

**Number of**

**Number of**

   

   

   

**Securities**

**Securities**

   

   

   

**Underlying**

**Underlying**

   

   

   

**Unexcercised**

**Unexercised**

**Option**

**Option**

   

**Options**

**Options**

**Exercise**

**Expiration**

 **Name**

**(Exercisable)**

**(Unexercisable)**

**Price ($)**

**Date**

Rick  D. Simas

2,800

-

$2.59

08/17/2010

President  and

8,000

-

$3.75

01/17/2012

Chief  Executive Officer

20,000

-

$7.50

10/13/2013

Gary  A. Stewart

   

   

   

   

Executive  Vice President

283

-

$3.73

03/01/2012

  Chief Credit Officer

62,000

-

$7.50

10/13/2013

JoAnne  C. Roberts
   
-
        Senior Vice President and
8,400
   
$7.50

10/13/2013
  Chief Financial Officer                  
 

**Option Exercises and Stock Vested in 2009**

 

        Named executive officers did not exercise any stock optionsin 2009.

 

**Salary Continuation Agreements**

 

        In order to provide long-term incentive toselected executive and senior officers, effective September 30, 2003, PacificState Bank entered into Executive Salary Continuation Agreements (each an"SCA") with four current officers of Bancorp, and two of the namedexecutive officers listed on the Summary Compensation Table, Rick D.Simas and Gary A. Stewart.

 

        Benefits payable under theSCAs are intended by Pacific State Bank to be funded bysingle-premium life insurance policies that were purchased in connection withentering into the SCAs and of which Pacific StateBank is the owner and beneficiary. The cash surrender value of those policieswas $7,030,000 at December 31, 2009.  Notwithstanding the existenceof such policies of insurance, however, the SCAscreate no rights or interests in the property or assets of Pacific State Bank;the sole obligation of Pacific State Bank under the SCAsis an unfunded and unsecured promise to pay money in the future, and the statusof any person who may assert a claim pursuant to an SCA is that of an unsecuredgeneral creditor of Pacific State Bank.

 

        Generally, each SCA provides the namedemployee with a specified annual money benefit (the "Annual Benefit")payable to the employee or to his named beneficiary or surviving spouse orestate, in that order, for a period of up to 20 years following the employee'sretirement upon or after a specified retirement age. If the employee should dieor become disabled prior to such specified retirement age, a percentage of theAnnual Benefit (on a sliding upward scale depending upon the number of yearswhich elapse between execution of the SCA and the employee's early death ordisability) would be payable.

 

        No Annual Benefit is payable if theemployee is terminated for cause or the employee voluntarily terminates hisemployment with Bancorp prior to his specified retirement age, but the fullAnnual Benefit is payable if the employee is terminated by Bancorp withoutcause or, in the case of Mr. Simasor Mr. Stewart, inconnection with a change in control of Bancorp.

 

        Subject to such contingencies, thefollowing table sets forth information regarding benefits payable under theSCAs which are currently in effect between Bancorp and thenamed executive officers in the Summary Compensation Table.

 

**Name**

** **

**Annual**

**Benefit**

** **

** **

**Present Value of Accumulated Benefit**

** **

** **

**Payments During Last Fiscal Year**

** **

** **

**Years Required**

**For Full Benefit**

** **

** **

**Years of Accredited Service**

** **

**Year Annual**

**Benefit Commences**

** **

**Retirement**

**Age**

** **

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

Rick  D. Simas

 

$

77,299

 

 

$

  106,743
 

 

 

-

 

 

 

10

 

 

 

5

 

March 2026

 

 

65

 

Gary  A. Stewart

 

$

93,253

 

 

$

  511,351
 

 

 

-

 

 

 

10

 

 

 

5

 

September 2015

 

 

65

 

 

**Employment Contracts, Terminationof Employment and Change-in-Control Arrangements**

 

        The table below shows the maximumincremental amounts that could be paid to the named executive officers upon achange in control or for termination without cause. The following informationis based on (i) the executive's salary at December31, 2009, and (ii) the assumption that the triggering event occurred onDecember 31, 2009.

 

**Change in Control**

** **

   

** **

**Severance Benefit**

** **

** **

**Vesting of Options**

** **

** **

**Salary Continuation**

** **

** **

**Total**

** **

Rick  D. Simas

 

$

-

 

 

$

-

 

 

$

  291,168
 

 

$

  541,168
 

Gary  A. Stewart

 

$

-

 

 

$

-

 

 

$

  783,834
 

 

$

  783,834
 

 

**Termination Without Cause**

** **

   

** **

**Salary**

** **

** **

**Vesting of Options**

** **

** **

**Salary Continuation**

** **

** **

**Total**

** **

Rick  D. Simas

 

$

-

 

 

$

-

 

 

$

  291,168
 

 

$

  291,168
 

Gary  A. Stewart

 

$

-

 

 

$

-

 

 

$

  783,834
 

 

$

  783,834
 

 

 

**PERSONNEL COMMITTEE REPORT ONEXECUTIVE COMPENSATION**

 

**Report of Personnel Committee**

 

*        The***Personnel***Committee Report is not deemed tobe "soliciting material" or to be "filed" with the SEC orsubject to the SEC's proxy rules or the liabilitiesof Section 18 of the Exchange Act and the report shall not be deemed to beincorporated by reference into any prior or subsequent filing by Bancorp underthe Securities Act or the Exchange Act, except to the extent Bancorpspecifically incorporates this Committee Report therein.*

 

The **Personnel**Committee ofBancorp has reviewed and discussed the Compensation Discussion and Analysis("CD&A") with management, and based on that review and discussion,the **Personnel** Committee recommended to the Board that theCD&A be included as part of this Proxy Statement and, by reference, the2010 Annual 10-K Report. 

 

**Personnel*  Committee Members***

 

YoshikazuMataga

 

Michael A. Dalton

 

Harold Hand

 

**CERTAINTRANSACTIONS**

 

         Bancorp has had, and in the future may have, banking transactions in theordinary course of its business with directors, principal shareholders andtheir associates, including the making of loans to directors and theirassociates.  Such loans and other banking transactions are made on thesame terms, including interest rates and collateral securing the loans, asthose prevailing at the time for comparable transactions with persons ofcomparable creditworthiness who have no affiliation with Bancorp.  Inaddition, such loans are made only if they do not involve more than the normalrisk of collectability associated with loans made to non-affiliated persons anddo not present any other unfavorable features.  

 

        Executiveofficers are not permitted to borrow from Pacific State Bank except for a de minimus amount to provide over-draft protection on theirchecking accounts.

 

**REGULATORY MATTERS**

    

        Subsequent to an examination by the California Department ofFinancial Institutions ("CDFI") which began January 11, 2010, weentered into a Waiver and Consent to an Order ("Order")of the CDFI,effective May 3, 2010, in which Pacific State Bank is required to take certaincorrective actions with respect to its operations.  The Order requires (1)Pacific State Bank, within ninety days from May 3, 2010, either to increase toand maintain tangible shareholders' equity at 10% of total tangible assets orenter into a definitive agreement to merge Pacific State Bank or sell it to anacquirer acceptable to the CDFI, (2) Pacific State Bank to provide monthlyboard reports to the CDFI of progress to increase capital or merge, (3) PacificState Bank to not make any distribution to its shareholder without priorapproval of the CDFI, (4) Pacific State Bank to provide a description of theOrder to its shareholders in this proxy statement, and (5) Pacific State Bankto notify the CDFI in advance when Pacific State Bank proposes to make anypublic announcement.

Before entering intothe Order and since entering into it, we took and have taken actions that weredesigned to satisfy the requirements of the Order. However, full compliance hasnot been achieved as of the date of this proxy statement.  Violation ofthe Order will be deemed by the CDFI to be conducting business in an unsafe orunsound manner and subject Pacific State Bank to further enforcement action.

 

**REPORT OF THE AUDIT COMMITTEE**

 

        INFORMATION CONTAINED IN THE FOLLOWINGREPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED "SOLICITINGMATERIAL" OR TO BE "FILED" WITH THE COMMISSION, OR SUBJECT TOTHE SEC'S PROXY RULES OR THE LIABILITIES OF SECTION 18 OF THE EXCHANGE ACT**NOR SHALL SUCH INFORMATION BE INCORPORATED BY REFERENCE INTO ANY OFBANCORP'S FILINGS UNDER THE EXCHANGE ACT, NOTWITHSTANDING ANYTHING TO THECONTRARY SET FORTH IN ANY SUCH FILING, EXCEPT TO THE EXTENT THAT BANCORPSPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.

 

        The Committee has reviewed and discussedthe audited financial statements of Bancorp for the fiscal year ended December31, 2009 with Bancorp's management.  The Committee has discussed withPerry-Smith LLP, Bancorp's independent public accountants("Perry-Smith"), the matters required to be discussed by Statement onAuditing Standards No. 61 (Communication with Audit Committees).  TheCommittee has also received the written disclosures and the letter fromPerry-Smith required by applicable requirements of the Public CompanyAccounting Oversight Board regarding the independent accountant'scommunications with the audit committee concerning independence, and hasdiscussed with the independent accountant the independent accountant'sindependence.

 

        Based on the Committee's review anddiscussions noted above, the Committee recommended to the Board of Directorsthat Bancorp's audited financial statements be included in Bancorp's AnnualReport on Form 10-K for the fiscal year ended December 31, 2009 for filing withthe Securities and Exchange Commission.

 

Submittedby:

 

 

MichaelA. Dalton, Chairman

YoshikazuMataga

PatriciaHatton

GeorgeM. Schofield

 

 

 

 

**TRANSACTIONS WITH MANAGEMENT**

 

        Some of the directors and officers ofBancorp and the companies with which those directors and officers areassociated are customers of, and have had banking transactions with, Bancorp inthe ordinary course of Bancorp's business, and Bancorp expects to have bankingtransactions with such persons in the future. In the opinion of Bancorp'smanagement, all loans and commitments to lend in such transactions were made incompliance with applicable laws and on substantially the same terms, includinginterest rates and collateral, as those prevailing for comparable transactionswith other persons of similar creditworthiness and did not involve more than anormal risk of collectability or present other unfavorable features.

 

**INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM**

 

        The accounting firm of Perry-Smith LLP("Perry-Smith"), registered public accountants, serves Bancorp as itsauditors at the direction of the Board of Directors and Audit Committee ofBancorp.  It is anticipated that a representative of Perry-Smith willbe present at the Annual Meeting with the opportunity to make a statement if heor she desires to do so and will be available to answer appropriate questions.

 

**Audit Fees**

 

        The aggregate fees billed by Perry-Smithfor professional services rendered for the audit of Bancorp's annual financialstatements for the fiscal year ended December 31, 2009 and for the reviews ofthe financial statements included in Bancorp's Quarterly Reports on Form 10-Qfor that fiscal year were $187,700; related fees for the year ended December31, 2008 were $124,500.  These amounts represented 85% and 82%,respectively, of the total fee paid to Perry-Smith during these years.

 

**Audit-Related Fees**

 

        The aggregate fees billed by Perry-Smithfor audit related services rendered for technical accounting, consulting andresearch were $0 for the year ended December 31, 2009; related fees for theyear ended December 31, 2008 were $0.

 

**Tax Fees** 

 

        The aggregate fees billed by Perry-Smithfor all tax services rendered to Bancorp for the fiscal years ended December31, 2009 and December 31, 2008 were $27,800 and $27,800respectively.  Those amounts represented 18% and 18%, respectively ofthe total fees paid to Perry-Smith during these years.

 

**All Other Fees**

 

        The aggregate fees billed by Perry-Smithfor all other services rendered to Bancorp, other than the services describedabove, for the fiscal years ended December 31, 2009 and December 31, 2008 were$0.

Before each professional service providedby Perry-Smith was rendered to Bancorp, such service was approved by, and itseffect upon Perry-Smith's independence was considered by, the Audit Committee.

 

**COMPLIANCE WITH SECTION 16(a) FILING REQUIREMENTS**

 

        Section 16(a) of the Securities ExchangeAct of 1934 requires that all of our executive officers and directors and allpersons who beneficially own more than 10 percent of Bancorp's common stockfile reports with the SEC regarding beneficial ownership of Bancorp'sstock.  We have adopted procedures to assist our directors and executiveofficers in complying with the Section 16(a) filings. 

 

        Based solely on its review of the copiesof such forms received by it, or written representations from the ReportingPersons Bancorp believes that, during 2009 the Reporting Persons complied withall filing requirements applicable to them, with the exception of Kathleen M. Verner.  Mrs. Verner,through verbal correspondence, has indicated that she has sold approximately166,540 shares of common stock in 2009 without filing the proper forms with theSEC or with Bancorp
 SOLICITATION
 

        Bancorpwill pay the costs of soliciting proxies from our shareholders, includingsoliciting proxies by mail.  In order to ensure adequate representation atthe Annual Meeting, directors, officers and employees (who will not receive anyadditional compensation) of Bancorp may communicate with shareholders,brokerage houses and others by telephone, email, telegraph or in person, torequest that proxies be furnished.  Bancorp will reimburse brokeragehouses, banks, custodians, nominees and fiduciaries for their reasonableexpenses in forwarding proxy materials to the beneficial owners of Bancorp'sshares.

 

**SHAREHOLDER PROPOSALS**

 

        Nextyear's Annual Meeting of Shareholders of Bancorp is scheduled be held on June9, 2011.  Any shareholder desiring to submit a proposal for action atthe 2011 Annual Meeting of Shareholders which is desired to be presented inBancorp's Proxy Statement with respect to such meeting, should mail suchproposal by certified mail, return receipt requested, to Pacific State Bancorp,1899 W. March Lane, Stockton, California  95207,Attention:  Dr. Harold Hand, Chairman of the Board.  Allsuch proposals must be received by Bancorp not later than December 15,2010.  Management of Bancorp will have discretionary authority tovote proxies obtained by it in connection with any shareholder proposal notsubmitted on or before the December 15, 2010 deadline.  Matterspertaining to such proposals, including the number and length thereof,eligibility of persons entitled to have such proposals included, and otheraspects, are regulated by the Securities Exchange Act of 1934, and regulationsadopted there under.

 

**OTHERMATTERS**

 

        Bancorp is not aware of any other matters to come before themeeting.  If another matter not mentioned in this Proxy Statement isbrought before the meeting, the proxy holders named in the enclosed Proxy Cardwill have discretionary authority to vote all proxies with respect thereto in accordancewith their judgment.

 

**INCORPORATION BY REFERENCE**

 

        The sections in this Proxy Statemententitled "Report of the Audit Committee" and "Personnel****CommitteeReport" do not constitute soliciting material and should not be deemedfiled or incorporated by reference into any other Bancorp filing under theSecurities Act of 1933 or the Securities Exchange Act of 1934, except to theextent Bancorp specifically incorporates any such Reports or the performancegraph by reference therein.

 

**FORM 10-K TO SHAREHOLDERS**

 

       The Form 10-K to Shareholders of Bancorp for the fiscal year ended December 31,2009 is being mailed concurrently with this Proxy Statement to all shareholdersof record as of April 20, 2010.  The Form 10-K is not to be regarded asproxy soliciting material or as a communication by means of which anysolicitation is to be made. 

 

**        A COPY OF BANCORP'S FORM 10-K WILL BE MAILED FREE OF CHARGE TO ANYSHAREHOLDER UPON REQUEST.  REQUESTS MAY BE MADE BY TELEPHONE AT (209)870-3214 OR BY LETTER ADDRESSED TO PACIFIC STATE BANCORP, 1899 W. MARCH LANE,STOCKTON, CALIFORNIA  95207.**

 

**        IT IS VERY IMPORTANT THAT EVERYSHAREHOLDER VOTE.  WE URGE YOU TO VOTE THE ENCLOSED PROXY AS PROMPTLY ASPOSSIBLE.  VOTING YOUR PROXY WILL NOT PREVENT YOU FROM ATTENDING THEMEETING AND VOTING IN PERSON.  FOR YOUR CONVENIENCE A RETURN ENVELOPE ISENCLOSED REQUIRING NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES. **

 

By Order of the Board of Directors,

 

 

George M. Schofield, Corporate Secretary

 

May 20, 2010

 

 

**PROXY**

**PACIFICSTATE BANCORP**

**AnnualMeeting of Shareholders June 10, 2010**

**THISPROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BANCORP**

 

 

The undersigned shareholder  of Pacific State Bancorp hereby appoints Rick Simas  and Russell Munson, and each of them, with power to act without the other and  with power of substitution, as proxies and attorneys-in-fact of the  undersigned, and hereby authorizes them to represent and vote, as provided on  the other side, all the shares of Pacific State Bancorp common stock which  the undersigned is entitled to vote, and, in their discretion, to vote upon  such other business as may properly come before the Annual Meeting of  Shareholders of Bancorp to be held on June 10, 2010, or at any adjournment or  postponement thereof, with all powers which the undersigned would possess if  present at the Meeting. 

 

 

**This proxy/voting instruction card when  properly executed will be voted in the manner directed by the undersigned  shareholder. If no direction is made, this proxy/voting instruction card will  be voted "For" the nominees listed on the reverse side and  "For" all other proposals in accordance with the recommendation of  the Board of Directors.**

**(Continuedand to be marked, dated and signed, on the other side)**

 

 

 

 

 

 

 

 

 

 

 

a 

 

 

 

 

 

 

 

 

**Address  Change/Comments**

**(Mark  the corresponding box on the reverse side**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**   FOLDAND DETACH HERE**

**THIS PROXY WILL BEVOTED AS DIRECTED OR IF NO DIRECTION IS INDICATED WILL BE VOTED "FOR"ALL PROPOSALS.**

 

 

 

 

 

 

   

 

Please mark

 

 

 

 

 

your votes as

indicated in

this example

 

 

1. ELECTION OF DIRECTORS

 

 

**FOR**

**ALL**

 

**WITHHOLD****FOR ALL**

 

**EXCEPTIONS**

 

 

 

 

 

 

 

 

 

 

 

 

1 Michael L. Dalton 

2  Maxwell M. Freeman 

3 Harold  Hand

4 Patricia Ann Hatton

5 Yoshikazu Mataga 

6 Rick D. Simas 

7 Gary A. Stewart 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INSTRUCTIONS: To withhold  authority to vote for any individual nominees, mark the  "Exceptions" box above and write that nominee's name in the space  provided below.)

Exceptions

 

 

 

 

 

 

         
  YES
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**I will**

**Attend the**

**Annual Meeting**

s
      
 

 

 

 

 
   
 

 

 

 

 

 

 

Mark Here for Address

Change or Comments

SEE REVERSE

 

 

 

 

 

 

 

 

 

 

 
   
 

 

 

 

 

 

 

 

 

 

 

 

**Signature**

  

 
 

**Signature**

 

 

 

 

 

 

**NOTE: Please sign as name appears hereon. Jointowners should each sign. When signing as attorney, executor, administrator,trustee or guardian, please give full title as such**

 

**    FOLDAND DETACH HERE**

**WEENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING**

**BOTHARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.**

Internetand telephone voting is available through 11:59 P.M. Pacific Time 

onJune 9, 2010. 

  

 

 

 

 

 

**PACIFIC STATE  BANCORP**

 

 

  

**INTERNET**

 

 

 

  

Use the Internet to vote your  proxy. Have your proxy card in hand when you access the web site.

 

 

 

 

  

 

**OR**

 

 

 

 

  

**TELEPHONE**

Use any touch-tone telephone to  vote your proxy. Have your proxy card in hand when you call.

 

 

 

If  you vote your proxy by Internet or by telephone, you do NOT need to mail back  your proxy card. To vote by mail, mark, sign and date your proxy card and  return it in the enclosed postage-paid envelope.

 

 

**Your  Internet or telephone vote authorizes the named proxies to  vote your shares in the same manner as if you marked,  signed and returned your proxy card.**

 

 

 

 

**Important notice regarding the Internet availability of**

**proxy materials for the Annual Meeting of shareholders**

The  Proxy Statement and Form 10-K to

Stockholders  are available at:

**www.proxyvote.com** 

 

 

 

 

**PACIFIC STATE BANCORP**

**1899 W. March Lane**

**Stockton, California 95207**

**(209) 870-3214**